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Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?

Author

Listed:
  • Fiori, Giuseppe

    (North Carolina State University)

  • Nicoletti, Giuseppe

    (OECD)

  • Scarpetta, Stefano

    (OECD)

  • Schiantarelli, Fabio

    (Boston College)

Abstract

This paper provides a systematic empirical investigation of the effect of product market liberalization on employment when there are interactions between policies and institutions in product and labor markets. Using panel data for OECD countries over the period 1980-2002, we present evidence that product market deregulation is more effective at the margin when labor market regulation is high. Moreover, there is evidence in our sample that product market deregulation promotes labor market deregulation. We show that these results are mostly consistent with the basic predictions of a standard bargaining model, such as Blanchard and Giavazzi (2003), extended to allow for a richer specification of the fall back position of the union and for taxation.

Suggested Citation

  • Fiori, Giuseppe & Nicoletti, Giuseppe & Scarpetta, Stefano & Schiantarelli, Fabio, 2007. "Employment Outcomes and the Interaction Between Product and Labor Market Deregulation: Are They Substitutes or Complements?," IZA Discussion Papers 2770, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2770
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    More about this item

    Keywords

    liberalization; competition; employment; unions; deregulation;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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